Packaging Solutions Corporation manufactures and sells a wide variety of packaging products Performance reports are prepared monthly for each department The planning budget and flexible budget for the Production Department are based on the following formulas, where q is the number of labor hours worked in a month Cost Formulas Direct labor $16 60 q Indirect labor $4,800 $1 30 q Utilities $5,700 $0 70 q Supplies $1,600 $0 20 q Equipment depreciation $18,800 $2 50 q Factory rent $8,600 Property taxes $2,600 Factory administration $13,600 $0 80 q The Production Department planned to work 4,300 labor hours in March however, it actually worked 4,100 labor hours during the month Its actual costs incurred in March are listed below Actual Cost Incurred in March Direct labor $ 69,700 Indirect labor $ 9,570 Utilities $ 9,100 Supplies $ 2,670 Equipment depreciation $ 29,050 Factory rent $ 9,000 Property taxes $ 2,600 Factory administration $ 16,270 Required 1 Prepare the Production Departments planning budget for the month Packaging Solutions Corporation Production Department Planning Budget For the Month Ended March 31 Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Total expense 2 Prepare the Production Departments flexible budget for the month Packaging Solutions Corporation Production Department Flexible Budget For the Month Ended March 31 Direct labor Indirect labor Utilities Supplies Equipment depreciation Factory rent Property taxes Factory administration Total expense Calculate the spending variances for all expense items (Indicate the effect of each variance by selecting F for favorable, U for unfavorable, and None for no effect (i e , zero variance) Input all amounts as positive values ) Packaging Solutions Corporation Spending Variances For the Month Ended March 31 Actual Results Spending Variances Flexible Budget Labor hours 4,100 Direct labor $69,700 Indirect labor 9,570 Utilities 9,100 Supplies 2,670 Equipment depreciation 29,050 Factory rent 9,000 Property taxes 2,600 Factory administration 16,270 Total expense $147,960

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Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared monthly for each department. The planning budget and flexible

Packaging Solutions Corporation manufactures and sells a wide variety of packaging products. Performance reports are prepared monthly for each department. The planning budget and flexible budget for the Production Department are based on the following formulas, where q is the number of labor-hours worked in a month:

	Cost Formulas
Direct labor	$16.60q
Indirect labor	$4,800 + $1.30q
Utilities	$5,700 + $0.70q
Supplies	$1,600 + $0.20q
Equipment depreciation	$18,800 + $2.50q
Factory rent	$8,600
Property taxes	$2,600
Factory administration	$13,600 + $0.80q

The Production Department planned to work 4,300 labor-hours in March; however, it actually worked 4,100 labor-hours during the month. Its actual costs incurred in March are listed below:

	Actual Cost Incurred in March
Direct labor	$	69,700
Indirect labor	$	9,570
Utilities	$	9,100
Supplies	$	2,670
Equipment depreciation	$	29,050
Factory rent	$	9,000
Property taxes	$	2,600
Factory administration	$	16,270

Required:

1. Prepare the Production Departments planning budget for the month.

Packaging Solutions Corporation
Production Department Planning Budget
For the Month Ended March 31


Direct labor
Indirect labor
Utilities
Supplies
Equipment depreciation
Factory rent
Property taxes
Factory administration
Total expense

2. Prepare the Production Departments flexible budget for the month.

Packaging Solutions Corporation
Production Department Flexible Budget
For the Month Ended March 31


Direct labor
Indirect labor
Utilities
Supplies
Equipment depreciation
Factory rent
Property taxes
Factory administration
Total expense

Calculate the spending variances for all expense items. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Packaging Solutions Corporation
Spending Variances
For the Month Ended March 31
	Actual Results	Spending Variances	Flexible Budget
Labor-hours	4,100

Direct labor	$69,700
Indirect labor	9,570
Utilities	9,100
Supplies	2,670
Equipment depreciation	29,050
Factory rent	9,000
Property taxes	2,600
Factory administration	16,270
Total expense	$147,960